CPI for June up 0.3 - exceeds expectation - 3.3% yr over year- 4.8% in 04

[papau]

"Fears of accelerating inflation abated for at least a day after the June producer price index dipped 0.3 percent, its first decline since November. "The inflation we saw in May reversed a bit in June and we've seen some moderation. That should be a good sign for inflation going forward," said Patrick Fearon, economist at A. G. Edwards & Sons in St. Louis, Missouri.

sigh .....


http://www.bls.gov/news.release/cpi.nr0.htm



Released on 7/16/04 For Jun 2004
CPI
Consensus 0.2 %

CPI less food & energy
Consensus 0.2 %

The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.3 percent in June, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The June level
of 189.7 (1982-84=100) was 3.3 percent higher than in June 2003.

The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) also increased 0.3 percent in June, prior to seasonal adjustment.
The June level of 185.3 was 3.2 percent higher than in June 2003.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
increased 0.3 percent in June on a not seasonally adjusted basis. The
June level of 110.4 (December 1999=100) was 2.6 percent higher than in
June 2003. Please note that the indexes for the post-2002 period are
subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.3 percent in June,
following a 0.6 percent increase in May. Energy costs, which advanced 4.6
percent in May, rose 2.6 percent in June and accounted for two-thirds of
the increase in the overall CPI-U. Within energy, the index for petroleum-
based energy increased 3.0 percent and the index for energy services rose
2.1 percent. The index for food, which rose 0.9 percent in May, increased
0.2 percent in June. The index for all items less food and energy, which
increased 0.2 percent in May, rose 0.1 percent in June. A deceleration in
shelter costs--up 0.1 percent in June after increasing 0.2 percent in May-
-was largely responsible for the smaller June advance.

Table A. Percent changes in CPI for Urban Consumers (CPI-U)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2003 2004 3-mos. ended ended
Dec. Jan. Feb. Mar. Apr. May June June '04 June '04
All Items .2 .5 .3 .5 .2 .6 .3 4.8 3.3

[Danmack]

1. More BLS mumbo jumbo papua-please explain what all this means

[papau]

5. If you believe energy/food about to drop to 02 levels - all is well

That is the approach of the wire service as they quote "core inflation" - meaning inflation ignoring effect of the rise in food and energy prices.

In terms of your pocket book, 4.8% year over year inflation is out of hand , worse than before, and you can expect another 1/4 point rise in the FED interest rate this month.

But the GOP and media will/are trying to sell the all is well.

And the political talking heads will say that the economy is not a Dem talking point.

By the way - did you notice that the drop in "core" was solely due to the drop in Housing, rental costs? Something I had not noticed in real life!

:-)

[Warpy]

6. It means that no matter how Enronned they've made the numbers

inflation is back. Of course, anybody who knows anything about economic history knows inflation always follows war. Of course, anybody who has had to buy food, gasoline, medication, housing, or any other essential knows they're all going up, way up.

My guess is that the Bush gang is heavily relying on nonessentials to pad the number downward, things like consumer electronics, which really haven't had a chance to inflate yet.

[papau]

2. AP version:Consumer Prices Rise Modestly in June

http://news.yahoo.com/news?tmpl=index&cid=530

Consumer Prices Rise Modestly in June

By JEANNINE AVERSA, Associated Press Writer

WASHINGTON - Consumer prices rose a modest 0.3 percent in June, half the size of the previous month's advance and fresh evidence that inflation poses no immediate threat to the economy.

The over-the-month increase in the Consumer Price Index — the government's most closely watched inflation barometer — followed a 0.6 percent spike in May, reflecting a big jump in energy and food costs, the Labor Department reported Friday.


In June, energy and food costs went up, but not by nearly as much. That helped to moderate overall consumer prices and brought a little bit of relief to Americans who have been forced to dig deeper into their pockets to fill up their gasoline tanks and buy groceries.


Excluding energy and foods costs, "core" prices nudged up by just 0.1 percent in June, down from a 0.2 percent rise in May and the smallest increase since December 2003. From an economic point of view, that deceleration suggested prices of other goods and services were relatively stable.

[nodictators]

10. AP Happy Talk, Reality 0.3% in June annualized is > 3.6% /year

Inflation at 3.6% per year is serious, and is not a sign "that inflation poses no immediate threat to the economy."

Does BushCo write the "news" for AP?

[TahitiNut]

15. More directly, June's CPI is 3.3% greater than June 2003

The inflation rate is best viewed as a TTM (trailing-twelve-months) index, not some contrived calendar-year-bounded projection.

What I'm looking at is CPI-U(1983) for June 2004 ... which is 189.7. That's 3.3% above the figure for June 2003, 183.7.

The rate of inflation is increasing. In the last 6 months, it has been 1.9%, 1.7%, 1.7%, 2.3%, 3.1%, and 3.3%. This indicates systemic economic problems, not some transient anomaly. This is the highest rate of inflation in three years.

[Frodo]

16. "The highest rate in three years"

In three years??? This is a problem?

Is that figure the CORE CPI?

On edit - The core index has gone from 193.2 in July of 2003 to 196.6 in June of 2004.

I get 1.76% for that. Very much in line with (or lower than) the last several years.

[TahitiNut]

21. Interesting spin. The (so-called) "core" rate of inflation ...

... (i.e. "All items less food and energy") is also rising.



June's 1.9% 12-month increase is the largest in 18 months.

http://data.bls.gov/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CUUR0000SA0L1E&output_view=pct_12mths

[Frodo]

26. No "spin" involved.

"Rising" is easily proven. "High" is easily disproven. Jumping all the way UP to 1.9%? Just isn't very scary... especially when the most recent month is ".1%"

Just saying "largest in 18 months" proves the point. Things have been incredibly low for a decade now. "Highest in five years" wouldn't scare me. "Highest in ten (or better 15)" would mean a bit more.

[papau]

30. But see post linked below for real problem - wages rising slower than CPI

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=689506&mesg_id=690098&page=


http://www.ssa.gov/OACT/TR/TR04/V_economic.html#wp15910...
YEAR WI CPI
1993 1.9 2.8
1994 4.1 2.5
1995 4.3 2.9
1996 4.0 2.9
1997 5.7 2.3
1998 6.2 1.3
1999 5.2 2.2
2000 6.4 3.5
2001 2.2 2.7
2002 0.3 1.4
2003 1.9 2.3
2004 3.6 1.2 BOY estimate - now "armchair estimated" as 2.5% and 3.5%

The above of course is before "disposable income adjustment", rich averaged with everyone else, Bush "lies" - or partial truth if you prefer.

[Frodo]

31. That looks about right.

Were's the "armchair" estimate come from?

[papau]

32. A true armchair - actuaries talking - my taking mental notes!

about as credible as the crowd I run with (although "run" is not the right word)

:-)

In any case, some wise folks see things a bit different from the numbers one sees in the papers.

Our latest discussion on hedonic numbers and their ability to understate the CPI was interesting, but no one quantified their feeling down to a number.

My best guess is that the difference between EU and Bush Admin methods for the CPI are 100 basis points - or a bit less - on the overall rate.

[TahitiNut]

34. I'd guess 2004 will see WI=1.9% and CPI=3.2%

When I review the SSA's economic assumptions (low, intermediate, and high) for 2004, I'm disturbed by the apparent bias that's evident in the 2004 estimates.

The (inflation-adjusted) wage index for the first quarter of 2004 was the "lowest since 1993" according to BNA, a service for corporate budget forecasters.

The revised reading of BNA’s Wage Trend Indicator™ pertaining to the first quarter of 2004 is 98.38, the lowest since the first quarter of 1993 when it stood at 98.35 (second quarter 1976=100). As released last month, the preliminary reading was 98.51.
http://www.bna.com/press/2004/wtimar04.htm

Advisories such as the above have the effect of being a self-fulfilling prophecy.

[papau]

3. Reuters version: Consumer Inflation Moderates in June

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=1&u=/nm/20040716/bs_nm/economy_prices_dc

Consumer Inflation Moderates in June

WASHINGTON (Reuters) - The pace of U.S. consumer price increases moderated in June, the government said on Friday, but the energy-driven gain outstripped expectations and may keep inflation concerns on the front burner.


The Labor Department Consumer Price Index , the most widely used gauge of inflation, rose 0.3 percent -- half the 0.6 percent jump posted in May when gasoline prices were soaring but slightly ahead of Wall Street economists' forecasts for a 0.2 percent rise.


So-called core CPI, which strips out volatile food and energy costs, edged up a smaller-than-expected 0.1 percent in June following a 0.2 percent May increase. Over the past 12 months, core inflation has risen 1.9 percent. <snip>

[catmandu57]

4. It means the books have been cooked

at least for the shortrun they have been propped up to support the current regime. If and that's a capitol IF, if by some crookedness the monkeyboy* manages to steal the govt. again, then all bets are off and the collapse begins.

[MaineDem]

7. My food and energy costs have gone way up

How can they logically take those items out of the mix? That makes no sense.

[Danmack]

8. I guess its the same as when the BLS doesn't count the people..

who have run out of UE benefits or have quit looking for work, in the UE numbers.

I don't believe a cheney thing the BLS says. They are nothing but another political arm of the BA.

I hope when Kerry gets in there he will do an audit of the numbers of the last 4 years and get them out. That alone could keep the cheneying repugs out of the WH for many, many years.

If they told me the sky was blue I'd still look up to make sure.

[rfkrocks]

9. It makes perfect sense under Bushco

Shrub's best friend played with numbers at Enron and thousands of workers got stiffed-Just like the dishonest GOP is playing with budget numbers now-cut taxes spend more and go to war-it is all part of the dogmatic destruction of the New Deal-they don't want to roll back time until 1960-the GOP's wayback machine is set for 1929

[Frodo]

11. Sure it does, they're trying to take out things that are too variable.

Did you notice the PPI for June? It went up .8% in May and was expected to go up .2% in June but actually went DOWN .3%

This is because energy costs are HIGHLY variable completely apart from actual inflation. Just as you can be in mild inflationary times (like the late 90's) and see gas prices go DOWN dramaticlly... it doesn't mean we were experiencing dramatic deflation. Food prices similarly experience significant up and down swings apart from overall price levels.

So they measure both "total" and "core" price changes. The "core" rate is the "important one" for determining actual economic price level changes, the total index is a better measure of the overall price changes inclusive of less economic factors. Today's core CPI does indicate that "inflation" is still under control, and the CPI indicates that prices are rising despite "inflation" being low.

Another good measure is the chained deflator built into the GDP reports. THAT measure change in prices of things people actually buy. So if people stop buying Honda's and start buying mopeds, any price change in Honda's after that point won't impact the measurement. It has also been on the rise a little (jumping from the mid 1% range for the last several months to 2.8% for the first Quarter), but doesn't yet indicate a problem.

[papau]

12. It only makes sense if Energy/food is just as "variable" to decreases as

they have been to increases.

Otherwise, the only number of interest is the 4.8% year over year increase in the cost of living.

Indeed, if non-core does drop, the feel good effect would go a long way toward electing Bush - but I am not holding my breath!

:-)

[Frodo]

13. True, but they ARE.

Which is why we saw a DROP in PPI in June. Oil prices had come down.

And oil and gas are a big part of it, they swing by tens of percents in under a year - BOTH WAYS. You don't want to go making economic policy based on a few months of negative CPI when the CORE rate is higher. You similarly want to avoid jacking rates to the sky based on oil price changes when the core is much lower.

Both mean something, but when discussing inflation that needs managing, it's the core figure that counts.

[papau]

18. Only core can be "managed" - but only with non-core is life style decrease

expressed.

At this point we have taken a life style hit of 3.3%, year over year.

That does not make for "good times" as the media/GOP are trying to sell us by only talking about low core rates.

[Frodo]

19. And only that which can be "managed" can be "blamed".

And even if we were to use the 3.3% as the "correct" number (ignoring BOTH a much lower core and a lower index of products actually purchased - the deflator)... you simply can't talk about 3.3% as a "bad" number.

It's just about spot on the figure we use for inflation in long-term financial planning. My whole financial plan is based on 3-3.5% inflation over my lifetime. We've just gotten UP to that after spending years and years below it and it's a problem? I think we were only BELOW that figure for one year from 1968 to 1991 (1.9% in 1986 is all I could find). You just don't win elections blaming inflation that at it's high point is lower than almost anything LBJ,Nixon,Ford,Carter,Reagan,and Bush1 produced and Clinton only substantially beat starting in 1996.

And it's incorrect to say people are only talking about core rates. If they had, there would have been no talk of "looming inflation" in the daily market briefs. The core numbers just haven't been high enough to justify it, they still show a slight dange of deflation.

[papau]

20. For years Wage-index was always much greater than CPI - under Bush it

is not.

Even with the gains the Rich have made!

Indeed I was looking at the wage index growth for the lower 80% of the population by income under Bush - and it sucks!

3.3 is as an absolute number is not high - you are right.

3.3% relative to wage increases under Bush sucks.

[Frodo]

22. This is a surprise?

I think we pretty much know that the job picture under Bush is sub-standard at best.

But inflation is more devestatinf to net worth than it is to income unless you live paycheck to paycheck. EVERYTHING you own is "worth less" than it was before. That should be a LOT more than just the effect on annual income.

But as a rebutal, since we're talking about recent monthly numbers (that measure of inflation has not BEEN at 3.3% for four years)...

The recent "disposable income" numbers have been UP 1.0%, .5%, .5%, .6%, .6% over the last five months (the period in which inflation measures have been spiking). That's substantially higher than the "all items" CPI number (.3%, .5%, .2%, .6%, .3%). Though I admit I don't know where to look to break disposable income into demographic groups, so I don't know the "bottom 80%" (a funny term) figures.

[papau]

23. As usual we agree! :-) - but the analysis for disposable is driven by top

20% and their tax cuts.

I believe you will find the wage index indicating a fall behind of 1% or more per year.

The AFofL/CIO web site has some good econ analysis on this.

[TahitiNut]

25. Yes, the value of the average hourly wage is going down.

The inflation-adjusted (CPI-U-1983) value of the reported average hourly wage (in 1983 dollars) for the last six months has been $8.36, $8.34, $8.30, $8.29, $8.27, and $8.25 respectively.

June's figures indicate a decline in real earning power of 1.21% from 12 months ago.

[TahitiNut]

24. Nonsense.

"EVERYTHING you own is "worth less" than it was before. "

Inflation reduces the 'value' of dollar-denominated assets (e.g. bonds, savings accounts, cash) and increases the 'value' of tangible assets. The classic definition is "more dollars chasing fewer goods."

What's particularly interesting in the announcement is the distinction being drawn between "core" and overall rate of inflation. The (so-called) "core" (i.e. excluding food and energy) tends to characterize the "cost of living" at higher income levels - food and energy are less elastic and comprise a far lower portion of what upper-income people spend their money on.

[papau]

28. True - below is wage index to CPI Clinton versus Bush from SSA

http://www.ssa.gov/OACT/TR/TR04/V_economic.html#wp159107
YEAR WI CPI
1993 1.9 2.8
1994 4.1 2.5
1995 4.3 2.9
1996 4.0 2.9
1997 5.7 2.3
1998 6.2 1.3
1999 5.2 2.2
2000 6.4 3.5
2001 2.2 2.7
2002 0.3 1.4
2003 1.9 2.3
2004 3.6 1.2 BOY estimate - now "armchair estimated" as 2.5% and 3.5%

The above of course is before "disposable income adjustment", rich averaged with everyone else, Bush "lies" - or partial truth if you prefer.

[TahitiNut]

29. Yes, BoyGeorge has managed to not only slightly depress ...

... real wages, he's also managed to drastically reduce the relative number of people working and receiving compensation for the wealth they produce through their labors.

Again, the Busholini Regime has decimated the economic well-being of the "lower 95%" (i.e. working class) and enriched the "upper 1%" (i.e. ownership class) and "next 4%" (i.e. management class).

[Zynx]

14. Have you noticed how they lie about Health and Housing costs.

They say that healthcare costs only went up by 3.7% last year and that housing costs rose by only 2.2%. Both of those are horribly wrong.

[NewYorkerfromMass]

17. Does housing costs include real estate prices?

I don't know. If so that would certainly reflect a big increase.

[The_Casual_Observer]

27. Real Estate people have been boasting of increases of 30%

I guess housing costs must be related to something other than the cost of houses.

I fear that all the economic information is no better than the pre-war intelligence on WMD.

[llmart]

33. Forget the technical mumbo jumbo.....

All I know is that in my household and the households of family members, friends, coworkers, not a one of them would say they're better off than they were 3-1/2 years ago. Not a one!